There’s something happening with CFOs. They’re looking a little more suave, have a little more swagger in the office. And they’re smart as hell. Yes, CFOs have always been intelligent. But today, it’s less about the geeky finance smarts and much more about the kind of smarts required to be a strategic business partner accountable for top level critical decision making.
“There’s been an evolution in America in terms of the CFO. The CFO is increasingly being called upon to weigh in on much more strategic decisions involving the company, including everything from transactions to providing assessments of emerging markets and analyses that go far beyond looking at the books and determining whether there will be enough cash to support investment.” – Kathryn Dill, Forbes.
I’m going to call this transformation, From Geek to Guru.
But why is this happening? What’s going on in the market that’s forcing this transformation of the finance function?
If we take a step back from the CFO function, and take a look at the market as a whole you begin to see a phenomenon happening.
We as consumers have a new level expectations from a brand that perhaps we didn’t have 10 years ago. We expect your service to be personal, provide on-going value in real time, and be memorable. We want to be delighted.
A recent study conducted by the Economist Intelligent Unit cites that 80% of companies believe their customers are switching to new consumption models. And this model is requiring businesses to respond, almost as if an ultimatum ‘If our customers are demanding something different and we don’t deliver? They’ll leave and go elsewhere.’
And in fact, in the same study, results proved businesses are responding, “over half [51%] of companies are in the process of changing or have changed the way they price and deliver their goods and services” as a response to the shift in new consumer demands.
So, our demands have changed and businesses are taking note. The story doesn’t end there.
It just so happens that this demand is presenting itself in the form of subscriptions, forcing businesses to innovate in a major way.
“Innovation is the hottest word in the business, but most of the discussion centers around products and services. The more profound challenge for most companies is imagining a new business model, a new answer to the fundamental question, how do we make money?” – Geoff Colvin, Fortune Magazine
When it comes to subscription businesses, the relationship with the consumer (not the product) is at the center. This changes everything.
And as a result, Zuora CFO, Tyler Sloat asserts, “Your traditional business model is obsolete. So assume this — everything you think you know about staying competitive is no longer relevant.”
In a product centered, transactional business, a relationship doesn’t really exist. You purchase the product — the end. There’s no relationship with the business or continued value delivered unless you purchase another product. But, in a Subscription business, every function has a relationship with the customer. Today, your touchpoints with your customers are endless.
From a revenue perspective, touchpoints often are synonymous with things like add-ons, downgrades, upgrades. Before, CFOs we merely tracking simple, backwards looking finance. But with subscriber metrics like these, measuring business performance is very much forward looking. Which basically turns the traditional business model upside down and inside out. And more often than not, they’re being tasked with evolving the business model.
“CFOs’ responsibilities go well beyond finance into balancing compliance and risk management with business-performance goals. They have an important role to play in reading and understanding evolving business drivers and helping their companies seize opportunities. CFOs now spend more time on strategy and operating issues and less on budgeting and accounting.” – Karen D. Quint and T. Christopher Butler, BloombergBusinessweek
They’re being pulled away from the day-to-day finance operations and now being held accountable for really owning this new business model, pairing new consumer demands with new revenue objectives the centers around relationships and having the quantitative knowledge to know how certain business levers will affect the business.
In essence, modern CFOs are transforming into business gurus. To dive deeper on this topic check out our new eBook, The Modern CFO.